Guest Post
By David Vardy
The Liberty
Group has just reported to the PUB dealing with reliability and supply issues
prior to the connection with Muskrat Falls. In this report Liberty notes that
NL Hydro has significantly reduced its load forecast over the past 18 months,
leading to the conclusion that little if any additional capacity is needed.
However, Liberty challenges the assessment of Hydro on its overly optimistic
diagnosis of the operating condition of diesel and gas fired generation
capacity on the Island and its readiness to provide reliable power up to the
interconnection with Muskrat Falls. Liberty also poses the question as to
whether we are ready in the event of a two year delay in completing the Muskrat
Falls project to 2022-23.
Reserve capacity
Liberty’s
review included a review of reserve capacity to ensure that the appropriate
planning criteria are in place. They note that
“Hydro long ago adopted a loss of load probability that was effectively
double that used throughout North America. The accepted loss of load
probability (LOLP) is equal to 0.2 per year, or one supply-related event every
five years.”
Adoption of
the North American standard would create a more robust system where such a
“supply-related event” would take place only every ten years, rather than five.
We are gradually moving to that higher standard but have a long way to go.
Risk of Outages Remains High
Load Growth Assumptions Questioned
Liberty casts
some doubts on whether Hydro’s load growth projections are too conservative.
They point out that NP’s forecasts have tended in the past to underestimate demand.
On the other hand Nalcor significantly reduced its estimate of load growth in
June 2016. Nalcor’s revised projections were much more realistic than those
which had been used to justify the Muskrat Falls project. However Liberty is
concerned that Hydro’s new economic growth projections may be too conservative
and based on inadequate research into the factors which influence demand. They
note that Hydro was unable to supply the latest Conference Board of Canada
Outlook for the province.
The Liberty Group Reports
The second phase
report of August 2016 dealt at length with risks affecting the transmission
lines connecting the Avalon Peninsula with Muskrat Falls. The Liberty reports,
as a group, deal with a wide range of issues including: selection of the
correct reliability criteria; the state of readiness of thermal and hydroelectric
generation units on the Island; as well as vulnerability of the transmission
system. Strangely missing from all of the three Liberty reports is any
reference to reliability factors relating to the generation plant at Muskrat
Falls.
Glaring Omissions
These glaring
omissions include the North Spur where the presence of sensitive clays pose a
risk of major landslides, a risk which will be amplified once the water is
impounded and the weight of water pressure is applied to the Spur. This weight
and pressure, combined with the possible ingress of water, can impact upon the
sensitive clays, causing them to liquefy and lose strength.
The water
management risks were amplified with the loss of the recent litigation before
the Quebec Superior Court, producing a declaratory judgement which upheld the
rights of Hydro Quebec under the power contract to manage both energy
production and water flows.
On top of
these risks it has to be recognized that the Muskrat Falls project has
experienced major quality control issues which undermine confidence in the
ability of the finished structure to produce reliable power. These include: the decision by Astaldi to
install a dome over Muskrat Falls and subsequently to tear it down; the
collapsed concrete cribbing or tubing which endangered the lives of eight
workers; the loose strand of transmission wire which forced Nalcor to reinstall
the lines; along with the leaking coffer dam at Muskrat Falls.
The PUB has to
be taken to task for excluding risks arising from Muskrat Falls generation from
the mandate of the Liberty Group. There is an Exemption Order which exempts the
Muskrat Falls project from the jurisdiction of the PUB but it treats both
generation and transmission equally. The PUB has allowed Liberty, as well as
other intervenors, to explore transmission line risks but has ruled out of
order the efforts of the Grand River Keeper Labrador (GRK) to bring expert
evidence to the PUB, dealing with the North Spur and water management. The GRK
have asked the Board to reconsider their decision to strike out GRK’s expert
evidence.
Recall Power
 |
| David Vardy |
The “Culture” of Hydro
The present
Liberty report speaks to the “culture” of NL Hydro, repeating similar comments
in previous reports.
“Liberty is especially concerned that the fundamental, yet all-important
notion of utility culture and capabilities has gotten little attention at
Hydro. This is even though Hydro suffered outages, equipment damage and
significant prudence-related penalties from these very causes. …The Province is
faced with many electric issues with a potentially great impact on the
community. The large investment in Muskrat Falls, new transmission,
consideration of new supply needs, and other system improvements are all
intended to enhance reliability. It is Liberty’s belief that the full benefits
of these investments, or any benefits at all from a reliability perspective,
will not result if Hydro is unable to responsibly operate, maintain and manage
its assets from a reliability perspective. This issue must be given a far
higher priority by Hydro.”
Does this
concern with the “culture” of Nalcor suggest that the operating costs of
Muskrat Falls may have been understated, along with the capital costs? In
previous reports Liberty has spoken of the fact that the operation of a DC line
requires new skills and possibly additional personnel.
Further Delays
“We acknowledge that we are susceptible
to criticism for speculating on the Muskrat Falls schedule in the absence of
hard data. But the lack of hard data is in fact one of the major reasons for
our schedule concerns. We do not subscribe to the “no news is good news”
philosophy, especially for large construction projects. And the lack of
visibility amplifies these concerns” (underlining supplied and interpreted
to mean “transparency”).
Particular attention should be paid to Liberty’s rather
understated language in describing the lack of transparency, which has
continued to haunt this project despite government’s promise to “open the
books”.
Conclusion
In summary, this is a report which points out
significant risks: equipment which has not been properly maintained; inadequately
researched load forecasting; the management culture at NL Hydro; and problems
in measuring reliability. Overall the report leaves us with a sense of disquiet
as to our ability to maintain an adequate and reliable supply of power, both
before and after interconnection. The most alarming feature of these Liberty reports
as a whole is the removal by the PUB of supply risks directly related to
Muskrat Falls from the scope of this hearing, which started in January of 2014
and is now into its fourth year.
The GRK has filed for reconsideration by the PUB its
decision to strike expert evidence surrounding the risks from failure of the
generation facility to supply its promised capacity of 824 MW. NL Hydro has
responded with a veritable cannonade from its unlimited legal resources. GRK has responded with rapier sharp high voltage defence, with little or no support from other intervenors.
Will the PUB respond by accepting the GRK’s expert
evidence on the North Spur and the vitally important question of water management
on the Churchill River? Will the PUB unleash the Liberty Group to do a
comprehensive report on all of the risks to the reliability of power and
adequacy of supply after Muskrat Falls is
interconnected? We await the decision of the Board as to how it will
deal with this glaring omission.
David Vardy
